Cyber crimes are rising at an alarming rate. For some industries, it is often not a matter of if, but when a cybercrime occurs. Prioritizing cyber liability insurance will become essential for modern business. We define cyber liability insurance and highlight its importance.
What Is Cyber Liability Insurance?
Cyber liability insurance protects policyholders against data breaches and other cyber crimes. Specifically, it covers the costs and loss of income that results from a cybercrime that directly (or indirectly) impacts your business. This is one of the best ways to protect your company in the modern age where cyber-attacks are happening regularly all across the world.
What Does Cyber Liability Insurance Cover?
Every cyber liability insurance policy is personalized according to the policyholder’s unique risks, needs, and coverage preferences. However, there are common inclusions with cyber liability insurance that you should consider. Notably, cyber liability insurance usually covers costs associated with the following:
- Loss of income
- Notifying employees
- Data recovery
- Computer systems damage repair
- Forensic investigations
- Litigation
- Regulatory defense
- Crisis management
- Business interruption
It is important to check with your provider and review any proposed policies before starting your coverage. All policies are unique, and it is important to ensure you are adequately covered if a claim is made.
For instance, if your policy does not cover costs associated with legal claims that you are liable for and you are not aware that this is the case (such as if a customer sues you for the leak of their private information), then you could face an unpleasant surprise when this situation arises.
Also, for this reason, it is strongly recommended to stay away from cookie-cutter, one-size-fits-all policy options. Instead, you should only choose a personalized cyber liability insurance policy.
How Does Cyber Liability Insurance Work?
As discussed, the purpose of cyber liability insurance is to protect the company from financial harm that results from company data breaches, computer program data (via a cyber attack), and other forms of cyber crimes.
For example, let us say your company holds private and sensitive information about customers, including but not limited to Social Security numbers, credit card numbers, account numbers, driver’s license numbers and health records. A data breach then occurs and someone outside the company (i.e. a hacker) gains access to this information.
They could then possibly sell this information or use it to attempt fraud on your customers. As you might imagine, this opens up your company to major business disruptions, including loss of income, lawsuits, and a major public relations disaster.
In this case, your cyber liability insurance policy will cover the costs associated with the data breach. This may include the attorney fees, settlement costs, public relations costs, and replacement income, along with any additional costs that you are responsible for that resulted from the data breach.
Of course, the full extent of coverage depends on your policy, which is why it is important to understand what it covers. Moreover, you should understand your limits and the deductible amount.
What Are the Risks of Not Having Cyber Liability Insurance?
There are many risks associated with not having reliable cyber liability insurance coverage. Perhaps the most notable risk is financial. You may be liable for major costs without an insurance policy. In some cases, it can be more than the company can realistically handle.
This can lead to an inability to defend yourself properly in a legal manner, a major loss of income that can be difficult to overcome, and the inability to replace critical IT infrastructure. On the other hand, a cyber liability insurance policy provides peace of mind that you are covered if any event were to occur.
Who Needs Cyber Liability Insurance?
We recommend a cyber liability insurance policy for any business owner who uses online systems as a part of daily operations and/or stores customer, client, and employee data online. In general, all business types run the risk of cyber and security breaches that could jeopardize their company’s operations.
Far too many business owners make the mistake of thinking that cyber liability insurance is not necessary and then fall victim to a cyber attack that leaves them financially vulnerable and liable. The good news is that cyber liability insurance from a reputable and experienced insurance provider is affordable and offers adequate protection for your business.
Contact Pro Insurance Group for a Free Quote
We take pride in protecting our clients from costs associated with data braces and other types of cyber liability crimes. You can receive a free, no-obligation cyber liability insurance policy quote from our professional team today. Feel free to contact us for more information and to receive your free quote from Pro Insurance Group.